Food Processing and Packaging Facilities
Food Processing and Packaging Facilities
Business Model Description
Set up and/or develop food processing and packaging facilitities to provide processed food and food products of major food crops (rice, cassava, banana), fruits (coconut, pineapple, water melon), vegetables (tomatoes, sweet pepper) and spices (vanilla, ginger, chili) through business to consumer or business to business models.
Expected Impact
Strengthen agricultural value chain while reducing post-harvest losses and import dependency and improving food security.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Zanzibar: Pemba
- Zanzibar: Kaskazini
- Zanzibar: Magharibi
Sector Classification
Food and Beverage
Development need
Agriculture is one of the main sectors in Zanzibar, contributing 27.1% of GDP (1). Despite the sector's key status in the economy, Zanzibar lacks significant production and processing capacity as well as private sector investments in the sector which leads to food insecurity, import-dependency and food availability being highly determined by external factors (2).
Policy priority
The Government, through its Vision 2050, aims to ensure that everyone has equitable access to sufficient quantities of safe, nourishing, and culturally appropriate food at all times for an active and healthy life, as well as to protect the most vulnerable members of society from the negative effects of emergency situations on their food security and nutritional status (3).
Gender inequalities and marginalization issues
In Zanzibar, women are estimated to undertake 80% of the agricultural, forestry and fishing labor (9). However, statistics show that to only 23. 6% households reported that the decision for spending the income from agricultural crops comes from women (7).
Investment opportunities introduction
Although the local demand for agricultural products is increasing as the imports of fresh food is increasing as well, only less than half of the arable land is under cultivation in Zanzibar. Additionally, the growth of tourism attracts a high demand for fishery, aquaculture and agricultural products (6).
Key bottlenecks introduction
Low technical skills and financial investment among farmers are key challenges to the agricultural sector (4). Only 7,7% of the national budget is dedicated to agriculture. This low contribution of government leads to tempered sectoral advancement due to lack of research and development and human resource development activities (9).
Food and Agriculture
Development need
Only 139.415 hectare (43%) of arable land are under cultivation in Zanzibar (4). Essential food and food stuff are import-dependent to make up for the lack of domestic production. There is a need of diversifying agro-products to decrease import dependent sector, contribute to the local consumption, increase value addition and agricultural productivity (10).
Policy priority
The Government is committed to transform the agricultural sector towards higher productivity, commercialization level and increase farmer income for improved livelihood while guaranteeing food and nutrition security (6).
Gender inequalities and marginalization issues
Despite being the primary contributors to the agriculture industry, women have limited access to and control over resources used in production, (7) including land, agricultural inputs, market access and financing, and cutting-edge technology. Additionally, the majority of MSMEs are either wholly or partly owned/run by women and youth, which play a leading role in agro-processing (11).
Investment opportunities introduction
In Zanzibar the majority of the agricultural products are exported in raw form without any value addition (3) while imports on food stuff including process food is increasing (1). In addition to the food processing, crop development, modern irrigation systems and water management are other areas of opportunity in the archipelago (2).
Key bottlenecks introduction
A lack of a comprehensive framework for enhancing food security and technical expertise on post-harvest losses, an overreliance on rain-fed agriculture combined with an inadequate rural microfinance system, and poor marketing of agricultural products challanges sectoral development and productivity (8).
Processed Foods
Pipeline Opportunity
Food Processing and Packaging Facilities
Set up and/or develop food processing and packaging facilitities to provide processed food and food products of major food crops (rice, cassava, banana), fruits (coconut, pineapple, water melon), vegetables (tomatoes, sweet pepper) and spices (vanilla, ginger, chili) through business to consumer or business to business models.
Business Case
Market Size and Environment
< USD 50 million
In 2020, Zanzibar imported 47.3 million USD worth of food and live animals, with a 5%YoY growth since 2016 while the export value was 24.9 million USD with a 60% YoY growth between 2016 and 2020 (6).
Indicative Return
> 25%
20% - 25%
YYTZ Agro-processing company has achieved an RoI of 20% (26).
A feasibility study for establishing and operating an industrial spice processing centre (ISPC) in Zanzibar presents an IRR of 32%, NPV = USD 1,128,168 and payback period of 4 years (15).
Investment Timeframe
Short Term (0–5 years)
UNDP Stakeholder Consultations have disclosed that it takes 4-5 years for a food processing company to achieve break-even point (26).
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Zanzibar imports essential foods like rice, sugar, and wheat to make up for domestic shortages, therefore the issue of post-harvest food losses is significant since it leads to an increased risk of food poverty and strengthens Zanzibar's reliance on imports (13).
In Zanzibar, post-harvest losses for main fruits ranges between 20-15%, while it is around 40% for main vegetables (13). The average loss for rice and cassava is 13% and 26% per year respectively (9).
Farmers are deterred from increasing market participation and from pursuing diverse and plentiful agricultural production because agricultural products lack value addition (9).
Gender & Marginalisation
Smallholder farmers' productivity is impacted greatly by post-harvest losses, food processing would decrease the PHL amount and empower them by value-added to the agro-products.
Expected Development Outcome
Developing food processing and packaging facilities will decrease the post-harves losses and increse the food security.
Improving food processing will enhance agricultural productivity, consequently decreasing the import dependency of Zanzibar, increasing local economic development and market participation.
Gender & Marginalisation
Food processing and packaging facilities will increase per capita income of smallholder farmes by value-addition of their products and due to lesser post-harvest losses.
Primary SDGs addressed
2.1.1 Prevalence of undernourishment
2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size
Malnutrition rate in Zanzibar was reported at 0.23% in 2018 according to Zanzibar Health Bulletin (18).
In 2021, total areas of planted acre of major food crops were 82,120.6 acres (1).
N/A
N/A
1.2.1 Proportion of population living below the national poverty line, by sex and age
According to HBS 2019/20, the proportion of the population living below the national basic needs' poverty line was 25.7% in total (18).
N/A
12.3.1 (a) Food loss index and (b) food waste index
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Outcome Risks
Local agro-processing may result in higher market prices for the agricultural products due to their allocation to processing which may end up increasing food insecurity.
Impact Risks
Lack of data collection for post-harvest losses of specific products may result in ineffective measurement of the impact created.
Impact Classification
What
Investing in food processing and packaging facilities will decrease the post-harves losses, increase the food security and empower smallholder farmers.
Who
Smallholder farmers, MSMEs active in agricultural sector as well as local community will be impacted by increased agricultural productivity.
Risk
Inadequate data collection of food waste and post harvest losses may lead to inefficient measurement of the produced positive outcomes.
Contribution
This investment opportunity area will decrease the current import-dependent agricultural value chain of Zanzibar, increasing food security for households and economic growth.
How Much
Currently, food processing and packaging market is slightly immature in Zanzibar, if developed, it is subject to effective growth and can decrease post-harvest losses significantly.
Impact Thesis
Strengthen agricultural value chain while reducing post-harvest losses and import dependency and improving food security.
Enabling Environment
Policy Environment
Zanzibar Agriculture Sector Development Program: The ZASDP offers a commercialization strategy and an integrated program for the agricultural sector, consisting increased quantities of high-quality agricultural products entering the domestic and export market channels as one of the targets (9).
Zanzibar Vision 2050: Vision 2050 aims at transforming agriculture from subsistence- based to export-oriented production in a sustainable and climate resilient manner through value addition for greater food independence (3).
Zanzibar Agricultural Marketing Policy and Implementation Strategy: The policy promotes value addition and agro-processing to increase competitiveness of local agricultural products to satisfy domestic and export markets through public and private sector investments to the industry (19).
MSME Policy 2020: One of the objectives of this policy is to improve market efficiency through expanding marketing infrastructure and appropriate regulations to encourage private sector involvement in production, processing and provision of agricultural market services (11).
Financial Environment
Financial incentives: The World Bank has mobilized a $2.3 billion worth Food Systems Resilience Program for Eastern and Southern Africa (14).
Fiscal incentives: General incentives are exemption from payment of import duty, excise duty, VAT and similar taxes on capital good for any investor. Strategic investors have more comprehensive benefits which consists long-term exemption from duties and tax, resident permit etc. (8).
Other incentives: 100% foreign ownership, 33 to 99 years of land lease agreement, employment of expatriates in key positions, 100% allowance for R&D activities (2).
Regulatory Environment
Zanzibar Plant Protection Act: The act regulates process, packaging, export of all plants in Zanzibar (20).
The Zanzibar Food Security and Nutrition Act: This act governs all issues related to food availability, food accessability, food utilisation and food stability and the realisation of the right to adequate food (21).
Zanzibar Trading Act, 2013: For marketing of the commodities produced in the FEZ, Department of Trade provides mechanism for establishment of public private partnership especially in planning, execution and administration of agro-processing initiatives (22).
Public Private Partnership Act, 2015: The Act provides for partnership between the Government and a Private Partner to deliver infrastructure and services that are required in development of the Free Economic Zones (23).
Marketplace Participants
Private Sector
YYTZ Agro-Processing, ZANOP.
Government
Ministry of Agriculture, Irrigation, Natural Resources, Livestock, Zanzibar State Trading corporation (ZSTC), Zanzibar Business and Property Registration Agency (BPRA), Zanzibar Investment Promotion Authority (ZIPA).
Multilaterals
IFAD, World Bank, European Union.
Japan International Cooperation Agency (JICA), The State University of Zanzibar (School of Agriculture), Tanzania Horticultural Association (TAHA), The Tanzania Growth Trust (TGT).
Public-Private Partnership
Zanzibar Agriculture Research Institute (ZARI), Small and Medium Industries Development Agency (SIMDA).
Target Locations
Zanzibar: Pemba
Zanzibar: Kaskazini
Zanzibar: Magharibi
References
- (1) Office of the Chief Government Statistician. 2022. Zanzibar Statistical Abstract, 2021. https://www.ocgs.go.tz/php/ReportOCGS/ZANZIBAR%20STATISTICAL%20ABSTRACT%202021.pdf
- (2) Zanzibar Investment Promotion Authority. 2020. Zanzibar Investment Guide. http://www.zipa.go.tz/pdf/guide2020.pdf
- (3) Zanzibar Planning Commission. 2020. Zanzibar Development Vision 2050. https://www.planningznz.go.tz/english/Downloads/current/ZDV2050.pdf
- (4) Ministry of Finance and Planning Tanzania. 2021. Tanzania National Five Year Development Plan. https://www.effectivecooperation.org/system/files/2022-02/FYDP%20III%20English.pdf
- (5) Tanzania Ministry of Agriculture. 2017. Tanzania Agricultural Sector Development Strategy Phase Il. https://asdp.kilimo.go.tz/
- (6) Zanzibar Investment Promotion Authority. 2022. Zanzibar Investment Guide with Sector Profile.
- (7) Office of the Chief Government Statistician Ministry of Finance and Planning Zanzibar. 2020. 2019/20 Household Budget Survey. https://www.ocgs.go.tz/php/ReportOCGS/HBS%20Main%20Report_final%2031.12.2020%20printing%20(2).pdf
- (8) Revolutionary Government of Zanzibar. 2007. Zanzibar Strategy for Growth and Poverty Reduction. https://www.unpei.org/files/sites/default/files/e_library_documents/tz-zanzibar-strategy-growth-poverty-reduction.pdf.
- (9) Zanzibar Agricultural Transformation for Sustainable Development, 2010-2020. 2009. https://www.gafspfund.org/sites/default/files/inline-files/ATI.pdf.
- (10) Revolutionary Government of Zanzibar. 2008. Zanzibar Food Security and Nutrition Policy.
- (11) Ministry of Trade and Industrial Development. 2020. MSME Policy.
- (12) World Bank. 2022. Tanzania Economic Update: Empowering Women - Expanding Access to Assets and Economic Opportunities.
- (13) Ministry of Agriculture and Natural Resources. 2021. Assessment of Post-Harvest Losses of Major Food Crops and Fish in Zanzibar.
- (14) World Bank. 2022. Food Systems Resilience Program for Eastern and Southern Africa. https://projects.worldbank.org/en/projects-operations/project-detail/P178566
- (15) RGoZ and Ecoland and Herbs and Spices GmbH, 2018. Feasibility Study for Industrial Spiece Processing centre in Zanzibar
- (16) United Nations. 2022. Sustainable Development Report 2022.
- (17) United Republic of Tanzania. 2019. Voluntary National Review (VNR) 2019.
- (18) Zanzibar Planning Commission. 2020. Annual Sustainable Development Goals (SDGs) Implementation Report, 2019/2020 Zanzibar
- (19) Revolutionary Government of Zanzibar. 2013. Zanzibar Agricultural Marketing Policy and Implementation Strategy https://www.foodsecurityznz.go.tz/FOLDER_1/Zanzibar%20Agricultural%20Marketing%20Policy%20and%20Implementation%20strategy.pdf
- (20) Revolutionary Government of Zanzibar. Zanzibar Plant Protection Act 1997. https://trade.tanzania.go.tz/media/Plant%20protection%20act-Zanzibar.pdf
- (21) Revolutionary Government of Zanzibar. Zanzibar Food Security and Nutrition Act. http://zanzibarassembly.go.tz/document/the-zanzibar-food-security-and-nutrition-act-no-5/
- (22) Revolutionary Government of Zanzibar. 2013. Zanzibar Trading Act. http://zanzibarassembly.go.tz/document/the-zanzibar-trading-act-no-14/
- (23) Revolutionary Government of Zanzibar. 2015.Public Private Partnership Act. https://zanzibarassembly.go.tz/document/public-private-partnership-act-no-8/
- (24) YYTZ Agro-Processing. 2022. https://www.yytzagro.com/about
- (25) BTC, Belgian Development Agency. 2012. Organic Spices in Tanzania. https://usercontent.one/wp/www.tdc-enabel.be/wp-content/uploads/2020/11/Organic-spices-in-Tanzania-organic-ginger-chilli-and-vanilla.pdf
- (26) UNDP Stakeholder Consultations. 2022.